By Steve Weinstein
By Devon Maloney
By Tessa Stuart
By Alison Flowers
By Albert Samaha
By Jesse Jarnow
By Eric Tsetsi
By Raillan Brooks
So there was nothing really out of order about this veteran New York City detective's presence last April 14 on the 16th floor at 5 Hanover Square. He was seated at a conference table with a pair of stock traders. OK, maybe it was a little strange that his girlfriend, a divorced bookkeeper named Sharon Kilcoin, was also there, but the traders were old friends, so why not?
"If this fund works out right and you can open up doors for more funds you won't have to work as long as you live," said trader Jimmy Labate.
"I know," said Gardell.
"This is a hell of a parachute," added Labate's partner, Jeff Pokross.
Gardell and Kilcoin could barely contain themselves. "I won't have to work Monday, Tuesday, Wednesday . . . ," said Gardell. "Will I have to work?" his girlfriend interrupted. "No," he replied.
"I know what I want. I want a Mercedes truck," said Kilcoin.
"Whose name are we putting this under?" asked Pokross.
"We can put this under not the same name as mine," said the laughing detective.
Two months later, the laughter stopped.
Labate, Gardell, and more than 100 othersmobsters, brokers, and big time investment adviserswere indicted for fraud and racketeering. The feds called it the mob's boldest move ever on Wall Street. The schemes included plans to defraud Gardell's union and two others. In league with representatives of all five Mafia families, the clever traders on Hanover Square were accused of scamming the public with a raft of inflated stock deals ranging from dotcoms to a chicken soup franchise. The biggest mob fish in the haul was alleged Bonanno crime family captain Bobby "Little Robert" Lino. Labate and Pokross were both described as mob associates who ran their business, DMN Capital Investments, Inc., under Lino's tutelage.
Pokross didn't take offense since it was also revealed that he had been a government informant since 1997, following his arrest in another stock scam. Pokross, government records show, guided the FBI in placing their bugs and told them everything else that was going on up there on the 16th floor.
Announced by Manhattan U.S. Attorney Mary Jo White on June 14, 2000, the Big Mafia Wall Street Case made headlines from San Francisco to London. Almost half the stories couldn't resist comparisons with The Sopranos, in which the fictional mob crew has its own young wiseguys in training fast-talking customers into shaky deals.
But for Steve Gardell, a 52-year-old decorated cop who helped solve some of Brooklyn's most brutal crimes and is one of the city's best-known detectives, the case was miserable real life. The indictment accused him of dishonoring his badge by steering the DEA's $175 million annuity fund into fraudulent stock schemes, leaking law enforcement secrets, helping the mobbed-up brokers get pistol permits and police parking placards, and even fixing an assault rap.
And for what? A lousy $10,000 worth of gifts and junkets: an aboveground swimming pool in the backyard of his rented home in Staten Island, trips with Kilcoin to Atlantic City and San Francisco, a stolen fur coat, and some bootleg satellite TV chips.
Gardell pled not guilty. His gloom was relieved only by the news that his retirement on a disability pension, one which entitles him to three-quarters of his approximately $80,000 salary, became official the same day he was fingerprinted and charged.
Gardell's union quickly distanced itself. Tom Scotto, the DEA's longtime president, posted a message on the union's answering machine: "Never, and I repeat never,has Steve Gardell approached any of the other four [annuity fund] trustees to invest in any of the companies mentioned in this indictment."
The swirl of talk was especially damaging for Scotto. President of the union since 1986, he's a 36-year police veteran and also heads the powerful National Association of Police Officers, where he befriended both Bill Clinton and Al Gore.
But last month, in response to defense lawyers' demands for added particulars about the charges, federal prosecutors named several additional labor officials, who, as the feds put it, "may or may not have known they were targeted as bribe recipients." Among them was Scotto.
And while no further reference was made to the other union officials, the feds, without citing any specifics, also listed Scotto as an unindicted co-conspirator in the case. Tagging individuals as co-conspirators is common in RICO cases, since it gives the government the opportunity to use their words at trial without actually indicting them.
Reached at his office on Thomas Street last week, Scotto angrily said he had no idea that his name had surfaced in the federal allegations. "Whatever occurred was of private concern with [Gardell]. I have a sterling record of 36 years in this department," he insisted. "I hope this is not character assassination."
Scotto said he confronted FBI agents who seized records from the detectives union offices on the day of Gardell's arrest. "I asked, 'Am I a suspect?' and they said, 'Absolutely not.' "
Moreover, Gardell's whole alleged gambitto get the annuity fund to hire a money manager who would place investments in mob-tied stock schemeswas "absurd," according to Scotto. "It was impossible to have happened. We don't entertain Mickey Mouse-type stock deals. We are one of the most highly efficient annuity funds in the city of New York."
Unlike the detectives' pension funds, which are jointly managed by union and city officials, the annuity fund is run by five union members. Scotto is a trustee, as was Gardell until his retirement last year. But Gardell never presented the plan to the board, said Scotto.
There was one unfortunate coincidence, Scotto acknowledged. Labate, the reputedly mobbed-up stock trader, lives across the street from him in Staten Island. But Scotto maintained, "I never even knew his last name. I called him 'Jimmy.' "
Gardell knew Labate as well from the neighborhood, according to Joseph Tacopina, Gardell's attorney, an ex-prosecutor who frequently represents police officers. And the detective's appearances at the investment firm were simply legitimate visits to a successful friend. "I have listened to the entirety of the evidence and there isn't a tape that establishes the guilt of Steve Gardell," said Tacopina. "And if there was no scheme to defraud the fund then Tom Scotto is innocent as well."
December 1, 1999, was the very first day the FBI started listening to its newly placed bugs in office 1604, and right away agents heard Pokross and Labate talking about a supposedly secret FBI plan to round up some other organized crime suspects the following daya tip allegedly provided by Gardell.
"What's the story with this Gardell thing for tomorrow?" asked Pokross. "Who's going to get pinched? It don't involve the little guy?" he asked, using a reference to Lino. "Not at all," responded Labate.
The tip proved solid: The next day, the FBI swept up 39 suspects, including leaders of the small, New Jersey-based DeCavalcante crime familythe often bumbling mob group that allegedly inspired The Sopranos.
It was the second time Gardell had tipped his pals about pending arrests, prosectors claim. Earlier, on October 19, 1999, Gardell allegedly told Labate that federal warrants had been issued for eight defendants, including Colombo crime family associates, according to the feds.
That December day, the traders were grateful. They had dispatched Gardell to the Paris hotel in Las Vegas for a five-day fling with comped meals, and they left a message on his room telephone. "Steven, it's Sal," said Salvatore Piazza, another reputedly mob-tied partner in the enterprise. "Jimmy and everyone want to know how you got there and if the room's OK. Call the office and let us know how you're doing." Moments later, Piazza spoke admiringly of the detective: " . . . Everything he always said he was gonna set up, he did."
When Michael Grecco, one of the traders' friends, was charged with slugging someone at a Christmas party a few days later, Gardell allegedly took credit for getting the charge tossed by fellow detectives. "This kid was going right to the can," Pokross told Labate.
The wiseguys found the detective smart as well as useful. On February 7, 2000, Labate reported that he had spent four and a half hours talking with Gardell the night before. "[H]e knows a lot about everything. He knows all of this business, he was pickin' my brains," said Labate, adding: "If you think . . . every cop's feedin' him information, every detective feedin' him information, you're out of your mind."
Gardell's favors ranged from the sinister to the mundane, prosecutors charge. Several of the traders carried guns ("For the one time you need it," Labate explained on one tape), and Gardell helped Pokross get a carrying permit, for which Labate allegedly paid him $1000. The detective also is accused of providing other highly prized New York City items: police parking permits. The wiseguy traders were heard discussing the etiquette of their use: where to park, how to use them for HOV lanes, what explanation to offer if challenged.
"[Y]ou have to keep my phone number with you in case something happens, you're drunk and you get pulled over with it," Labate explained as he gave a permit to John Black, a stockbroker allegedly tied to the Luchese crime family. "[T]hey're gonna bring you in the station house, you're gonna call me and I'm gonna have you taken out of the station house. I'm serious. . . . How do you think we got Mikie [Grecco] help?"
Those were the perks of office, the little things that a cop with connections could offer ordinary civilians, winning their gratitude and admiration. But the nub of the conspiracy, prosecutors charge, was Gardell's access to the millions contributed annually by the city on behalf of each detective to the DEA's annuity fund, a post-retirement bonus for those who put in hard years on the job. What was in it for Gardell that an otherwise good cop would jeopardize his comrades' savings?
Fifty thousand dollars, according to prosecutors. That's what they claim Jimmy Labate was talking about on March 6, 2000, when he and Gardell discussed the upcoming arrival of a respected investment adviser from San Francisco named William Stephens.
"Everything is going well; the fact is we can work it out with the guy," said Gardell. Then the detective added: "How much?"
"Altogether, maybe 50 pounds," answered Labate.
Gardell's role was to arrange for Stephens to win control over a large chunk of annuity funds. Some would go into "stuff that smells like rose petals," as Pokross put it, the rest into wired deals in which the companies would kick back bribes in return for the union's investment.
As the deal progressed, Gardell mentioned "Tom" on several occasions. Scotto is the only "Tom" on the DEA board of trustees.
"You want to talk to Tom first?" asked Labate, at one point in an apparent reference to Scotto. "Yeah," answered Gardell. "I have to talk to Tom."
Meeting with Stephens on March 23, Gardell seemed optimistic. "If everything is acceptable, and it looks pretty good," said Gardell, "we should be able to start July 1. We are starting to liquidate most of these other companies we have."
Again the detective made an apparent reference to Scotto: "Let me bring up something else because Tom brought it up, to have our members have some choice, do you pick all for them, or do they have a choice?"
For his help, Gardell got $1000 from the traders on April 19, 2000, prosecutors allege, and later that month, they say, he and Kilcoin were sent on a free trip to San Francisco to visit Stephens's operation there.
But Gardell was already growing nervous. He was getting warnings, he told his friends. On April 11 he allegedly told Labate that the phones at the Hanover Square office were tapped. A few days later, on April 14, Gardell launched into a long, jittery ramble. He was being investigated by someone, friends had told him, but by whom he couldn't figure out. Someone had told him it was due to something "personal with Scotto."
"It could be fuckin' anything, I mean I'm not his babysitter, but I'm the treasurer, I sign the checks," said the detective. Worried, Gardell said he had gone to see "one of the guys I've known my whole life," a former police expert on organized crime who was "now an agent." That friend had tried to reassure him, Gardell said. He quoted his pal saying: " 'I mean I might not be able to help ya but I'm surely gonna tell you somethin'. . . . There's nothin' goin' on where I am, so I don't what-the-fuck know who's jerkin' your chain off.' "
Gardell said he was sure there was no NYPD investigation since the department would have been obligated to tell him about pending issues after he put in his retirement papers. "[A] red flag comes up. The clock stops until the investigation is finished," he said.
He then raised his union leader's connections. "Scotto is fuckin' tight with . . . Clinton and Gore," said Gardell. " . . . So I'm sayin' to myself, [if] somethin's goin' on with him . . . , he's not gonna get a fuckin' hello from them but someone is gonna tell him. Or if somethin's goin' on, they're gonna say, hey, bury it. We're not goin' anywhere with this thing. Because if they do, who's the one gonna look like assholes?"
"Them," said Pokross.
"Yeah, them," said Gardell.
Prosecutors say they arrested the suspects before the investment scheme could be carried out. Gardell's girlfriend, Sharon Kilcoin, has not been charged. Nor has Scotto been charged with any crimes, and other than his co-conspirator status in the Wall Street case there is no indication of any wrongdoing on his part. But friends say there is no love lost between Scotto and Gardell these days.
So far, 60 defendants, including Lino and Labate, have pled guilty or been convicted. Stephens, Gardell, and three other non-mob defendants are headed for trial in September. "I don't believe there is anything said between Gardell and my client that can even be construed as unethical, much less illegal," said Sarita Kedia, Stephens's attorney.
Tom Scotto broke off his discussion about the DEA and its funds after he was pressed about his dealings with Gardell. "This is all under litigation and it doesn't make sense to discuss it."
His union's members, both active and retired, say they're waiting to see what happens. Gardell's case is heartbreaking, said one former detective who worked with him in Brooklyn. "We were lucky to have had Stevie Gardell in the old six-four precinct," he said. "He looked out for us. He was a cop's cop."
Transcripts from a secret FBI bug that recorded conversations on April 14, 2000, among Stephen Gardell, Jimmy Labate, Sharon Kilcoin, and Jeff Pokross, the FBI's cooperating witness No. 1 (CW-1).
Research assistance: James Wong